The sale of counterfeit goods is skyrocketing in the U.S. and around the world. Every day someone sells a knock-off product on eBay losing billions of dollars in potential sales from legitimate brand owners and also eroding their intellectual property rights. Globally, the economic impact of counterfeiting and piracy are projected to reach 4.2 Trillion dollars by the year 2022 and risk 5.4 million jobs. Historically, counterfeit goods, also referred to as knock-offs, were sold in open-air markets or at swap and shops. However, today, almost 70% of all counterfeit goods are sold on-line through e-commerce marketplaces like Amazon and eBay.
Counterfeit Merchandise includes any good or service which uses a counterfeit mark and may impose civil or criminal liability for the sale, manufacture and distribution of counterfeit goods. Counterfeit goods are goods which include a registered trademark, typically a famous mark, and are made or sold by a party who has doesn’t have the right to use the mark. Knockoff is another term for counterfeit goods and pirated goods usually refers to the reproduction of a copyrighted products such as music, movies, books, or software.
Selling counterfeit merchandise can impose civil or criminal liabilities which in some cases can include fines of up to $5,000,000, imprisonment, treble damages and attorney’s fees.
Criminal Liability for Trademark Counterfeit
You can be criminally liable for selling, making or distributing counterfeit merchandise. Under U.S. Criminal Laws, whoever intentionally—
- trafficked or attempted or conspired to traffic in goods or services (or labels, documentation or packaging for goods or services); and
- knowingly used a counterfeit mark on or in connection with those goods or services, or a counterfeit mark was applied to labels, documentation, or packaging for those goods or services.
Selling just one counterfeit item can be a felony with fines up to $2,000,000 and 10 years in prison. Repeat offenders can face fines up to $5,000,000 and 20 years in prison.
Civil Liability for Trademark Counterfeiting
In contrast to criminal liability, civil liability for trademark counterfeiting attaches when someone:
- Intentionally uses a counterfeit mark, in commerce;
- Knowing that the mark was counterfeit;
- Counterfeit merchandise is exchanged in connection with the sale, offering for sale or distribution of goods or services;
- Counterfeit merchandise’s use is likely to cause confusion, mistake or to deceive.
A counterfeit mark is defined as either a mark that is registered with
the United States Patent and Trademark Office or a false designation that is identical with, or substantially indistinguishable from a registered or common law mark. If someone is found liable for selling, offering to sale or distributing counterfeit merchandise, Civil Remedies can provide up to treble (3x) monetary damages, including profits or damages, reasonable attorney’s fees and the costs of litigation.
Buying and selling products on-line has become common place. In many cases, you don’t know where the goods originated from and may not be aware of any potential counterfeiting issues. However, claims and accusations of selling, offering to sale and distributing counterfeit merchandise should not be take lightly. If you would like to discuss how these legal issues may involve your online purchasing and selling activities, please schedule a meeting with one of our attorneys.